Accounting for Income Taxes: Fundamental Principles and Special Topics (Portfolio 5001)

April D. Little

IFRS Tax Practice Leader and a Partner

Grant Thornton LLP


Larry Walther

EY Professor and Head, School of Accounting

Utah State University


Paul Howell

Retired Partner

Grant Thornton LLP

At a glance

I. Introduction
II. Temporary Differences
III. Recognition and Measurement
IV. Financial Statement Presentation and Disclosure
V. Uncertain Tax Positions
VI. Special Topics


Tax Management Portfolio, Accounting for Income Taxes: Fundamental Principles and Special Topics, analyzes the rules in FASB Accounting Standards Codification Topic 740 (ASC 740), Accounting for Income Taxes, and its international counterpart, IASC International Accounting Standard 12, Income Taxes. Application of these standards requires a thorough understanding of their conceptual underpinnings, and significant judgment is required in implementation of these decidedly principles-based standards. This Portfolio also discusses associated issues such as the impact of tax-planning strategies, tax-advantaged transactions, and reporting and disclosure requirements.

This Portfolio provides a historical perspective on accounting for income taxes, discusses the conceptual cornerstones of accounting for income taxes under U.S. GAAP, and provides context for understanding the detailed rules on which the rest of the Portfolio focuses. Section II defines, explains, and illustrates temporary differences as well as the related concepts of deferred tax liabilities and deferred tax assets. Section III explains how a company initially should recognize and measure deferred tax liabilities and assets and how to adjust them to account for certain subsequent events. Section IV explains and illustrates how to present and disclose deferred tax assets and liabilities in financial statements. That section covers, compares, and, where necessary, contrasts disclosure requirements under ASC 740 and SEC rules.

Section V discusses accounting for uncertain tax positions. Section VI analyzes numerous situations requiring special treatment, including business combinations, state tax issues, employee compensation and benefits, international operations, intraperiod tax allocations, interim reporting, international reporting standards (including ongoing efforts to achieve global convergence), and other selected topics. The Portfolio includes Worksheets illustrating issues regarding the application of the accounting for income tax rules.

This Portfolio may be cited as Bloomberg Tax Portfolio 5001, Howell & Walther, Accounting for Income Taxes: Fundamental Principles and Special Topics (Accounting Policy and Practice Series). Within the Accounting Portfolio Series; however, within Bloomberg Tax materials, Portfolios are referenced by number and name only, such as APP 5001, Accounting for Income Taxes: Fundamental Principles and Special Topics.

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